Reforming the tax systems in Africa -Swedish experience

By Patrick Kiconco Katabaazi

One of the biggest development challenges in Africa is the inability to mobilize adequate revenue to meet public expenditure demands.

One would think that this dilemma is purely an African problem. It is not. Most countries have been confronted with domestic resources mobilization dilemma and even those that have made strives, they have to keep fine-tuning their systems to keep pace with the fast-changing world.

Sweden is one of those countries that have transformed the tax system to a level where the Swedish Tax Agency (Skervettee) is voted year in and year out as the best public agency!

Is it possible for a tax agency to be this popular? In Sweden it is! This didn’t happen either overnight or that easily.

The Swedish Tax Agency (Skatteverket) is a public agency in Sweden responsible for national tax collection. The agency was formed on 1 January 2004 through the merger of the Swedish National Tax Board (Riksskatteverket) and the then 10 existing regional tax authorities (skattemyndigheter).

According to the Commissioner General-, the reform process has taken over 30 years. Swedish Tax system is based on transparency, trust and innovation.

The reform was very ambitious, involving a mixture of tax rate cuts and tax base broadening amounting to about 6% of GDP.  These started in in 1991 and resulted from a long process of investigation in which alternative blueprints for tax reform were carefully studied by various government committees involving academic tax experts, civil servants, politicians and representatives of the most important interest groups. During this long process of detailed analysis, the key players in the Swedish tax policy debate reached a high degree of consensus concerning the main weaknesses of the old tax system. It is this painful and highly successful process that is responsible for the robust tax regime we see today.

Besides tax cuts and broadening of the tax base, inculcating the aspect of public and client satisfaction has produced profound results.

It is clear that most citizens don’t trust government agencies and as such the former looks at the latter with suspicion and the reverse is true.

One of the deliberate actions taken by the Swedish tax agency was to reconstruct a new culture based on trust and mutual respect. This strategy has paid off. The tax agency opened doors to taxpayers but also did their best to innovate ways where taxpayers could easily pay their taxes.

Currently, over 98% of tax collection is based on voluntary compliance and over 90%of the taxpayers don’t have to have a physical interface with the agency but rather use online services.

As part of building trust and confidence, the Tax agency had to reform internal organization culture geared towards minimizing wastage of public resources and efficient handling of cases. For example, the commissioner-general has no official car or special budget. She has no individual office but sits with the rest of the staff in general space. The modesty of employees at the tax agency is part of the wider public service culture of effective utilization of resources to the extent Prime Minister of Sweden travels economy class for national engagements.

There is a lot of things to learn from the Swedish tax agency ranging from administrative reforms to communication, taxpayer -tax collector relationship building and research and development.

The writer is Centre for Budget and Tax Policy Founding Director. He is currently in Sweden on a study tour of the tax and social security systems.